What’s building up in India’s wavering power sector? Tottering piles of bad debt at PFC

An RTI reply has revealed that the Power Finance Corporation has claims worth INR65,000 crore pending in NCLT — much higher than what the power-sector lender has disclosed in its investor presentation. While the company says efforts under various debt-recovery and restructuring mechanisms are on, the falling health of India’s power sector could play a spoiler.

Minister of state for power, new, and renewable energy RK Singh at the listing ceremony of the USD750 million international bond of the Power Finance Corporation in New Delhi on January 27, 2020.

India’s creaky power infrastructurehas a chilling message for the country’s largest lender to the sector, the Power Finance Corporation (PFC). The government’s eighth-largest profit-making company could be staring at losing INR1 lakh crore to bad debt. Officially , PFC has already classified less than a third of this estimated figure, or INR29,466 crore, as non-performing assets (NPAs) and has

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an RBI norm restricting credit exposure. Does this mean the merger would be undone? If that happens, PFC will get a much-needed fund infusion, as the government would then need to pay back INR15,000 crore. What are the chances? Perhaps as much as a sugarcane that went down the elephant’s mouth. ( Graphics by Mohammad Arshad)

India’s creaky power infrastructurehas a chilling message for the country’s largest lender to the sector, the Power Finance Corporation (PFC). The government’s eighth-largest profit-making company could be staring at losing INR1 lakh crore to bad debt. Officially , PFC has already classified less than a third of this estimated figure, or INR29,466 crore, as non-performing assets (NPAs) and has

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an RBI norm restricting credit exposure. Does this mean the merger would be undone? If that happens, PFC will get a much-needed fund infusion, as the government would then need to pay back INR15,000 crore. What are the chances? Perhaps as much as a sugarcane that went down the elephant’s mouth. ( Graphics by Mohammad Arshad)

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